2/11/2013 8:00 PM ET|
Why you need a bank account
Protection and convenience are important reasons not to keep your money under the mattress.
Believe it or not, there are people who don't have a bank account. The reasons why they have been hanging on to their cash vary, but some think the fees and hassles of a bank account just aren't worth it. Instead, they use money orders, prepaid debit cards or plain old cash. But not having a bank account can put limitations on your financial life.
Having a bank account is a personal choice, not a requirement. However there are times when you may not be able to skirt by the fact you will need to open a bank account. Here are some of those reasons:
Lender/creditor requirements: Some situations will require you to have a bank account, because the information will be necessary on an application for a loan or mortgage. Lenders and other creditors may not have a lot of faith in your financial abilities if you are not keeping even a basic checking or savings account.
Check cashing: You may have to contend with other issues throughout your life, such as how to get a check cashed. Personal checks, payroll checks and other incoming monies may dictate your need for a bank account, if you receive checks frequently. You can cash checks without a personal bank account, but it may cost you fees for the service. If the check is written on an out-of-town bank, you may have to go to a check-cashing business, which will typically take a percentage of the check amount.
Bill payments: It can be hard to imagine paying bills via the mail without having a checking account, but some consumers bypass the banks and use money orders rather than checks. It's a lot harder to go through this process, including paying for the money orders each month, but the person will be able to skirt some bank fees. However, doing so poses a paper-trail concern. While money orders can be tracked, it may not be as convenient as having the backing of the bank in the event your payment doesn't make it to your creditor.
Lack of protection: Banks that are FDIC-insured will guarantee the safety and accessibility of your money. When you keep your cash in your drawer or under the mattress, there is no such guarantee. If your home catches fire or you are the victim of a burglary and your cash is gone, it is most likely gone forever. If the same situation strikes your bank, your money is protected.
No record of spending: If you spend only in cash and do not write down what you spend or where, you lose the ability to have accurate financial records for planning purposes. A bank account provides a monthly statement, which shows what you spend and where you spend it. These statements may be necessary at some point in your life, especially if you want to buy a home or qualify for a personal loan.
Exploring your options
Even if you have lived blissfully over the years without a bank account, there may still come a time when you will need proof of one to proceed in your financial life. There are several options other than traditional checking accounts. While fees for maintaining a bank account are certainly increasing, consumers can compare the many different features of bank accounts in both the online and offline markets.
Depending on your needs, you may be able to open a bank account that is reasonably priced and offers only the services you need. If you are just looking for a simple account that allows you to direct-deposit your payroll check or pay some monthly bills, make sure to compare several banks before making a commitment.
Check for the requirements on minimum balances, cost of account maintenance, ongoing fees for banking services and other features you might need. With a little research and comparison shopping, you will likely find an account that fits your needs without costing you a small fortune.
More from U.S. News & World Report:
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I used to work for Wachovia, which then converted to Wells Fargo. It was disgusting how we were supposed to try and convince everyone and anyone to open a new account. We called them "solutions", but in reality, I don't think a 98 year old woman living on 800 dollars of social security every month needed a new bank account...yet we were still supposed to ask. Even if they were raging pissed when they called, we still had to use each call as a sales opportunity, and we were reprimanded if we didn't. For the record, phone bankers don't make that much money. They're pressured with required sales quotas, and bonuses-which are still taxed the hell out of. Even if we did make bonuses, then that would mean we were expected to do even BETTER the next quarter.
Not only that, but come on! They took a huge bail out, and many banks are still sitting on that money. Their CEOs didn't lose any money-in fact, the year that wells took the bail out, they were able to report a record profit for that quarter. It's disgusting! I say we stop investing in these stupid bankers. They're not looking out for anyone but themselvses
I've never really understood the problems people have with keeping a bank account. Every bank account I've had has been free as long as you do a specific thing. In my case, as long as I have direct deposit set up, there are no fees. And as long as you have a job, it doesn't really make sense not to have direct deposit. Why would anyone actually *want* to go to the bank to cash a paycheck? Other banks I've used in the past have required some minimum balance, but it's usually not very much unless you want an account that gains you interest. And that's just with using a normal bank. Credit unions are another option that typically offer fewer fees if you can't find a bank that has the same option I have - no fees if you have direct deposit set up. Even the savings account has no fees as long as you have at least one transfer to it each month. That's easy... I set up an automatic transfer from checking to savings each month for a set amount and it's all set. That not only removes the fees, but it automatically puts money aside so I don't have to remember to do so. And since transferring money is quick, easy, and free, I can always move it back to checking anytime I want.
And even if you do have fees, you are probably going to pay less than you pay in buying money orders or paying to have checks cashed. I'm sure there are a lot of people out there who think they are saving money by not using a bank and who are actually spending more than they would with a bank account. They just don't realize it.
You know what? The bank makes money from my money. I don't get the money they make from my money. Let's start whining and crying about it and stop using banks and keep our money to ourselves!! Of course, when I have it all as cash or on a pre-paid debit card, I also don't get any money. So why cry about it? You aren't getting money either way. Save yourself the hassle of not having a bank account (or credit union account) and perhaps even save some money simply by getting one. Are you hurting the banks by not having your money in them? Sure. But why do you want to? Does it really matter? And if you're also hurting yourself by paying more in money order and check cashing fees and time spent doing those things, then why keep doing it? In the end, that is hurting you far more than it hurts the banks.
You also need a bank account if you receive an IRS refund or receive any US Government check (such as Social Security, Military retirement, US Government retirement, etc.)
"Hidden" fees only get charged to your account if you don't pay attention,I've worked at a credit union. If you happen to "forget" about a bill and you overdraw... you pay a fee for owning the bank money now. It's pretty simple. And if you are a good customer most banks will reverse it for you. If you are paying a checking account fee on a personal account, well you got hosed for not asking questions on free checking accounts. I don't know a bank that doesn't have one.
I have never been charged a fee at a credit union or a bank. Don't blame the banks for "taking your money" when YOU haven't been responsible.
Banks/Credit Unions are pretty much a requirement in our society. Yes it is still possible to run everything with cash. My parents live in Mexico and that society is still very much entrenched in a cash culture. My father is always carrying a wad of pesos - I always worry he is going to get mugged.
Our society certainly has moved into the digital age, even checks are now going the way of the horse and buggy, they are almost all electronic transactions.
Here is my prophecy, cash will be extinct by 2050. We will all have chips embedded in us in order thwart fraud. Our choice, live off the grid and eat berries and bear meat in the Rockies...
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